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Matthew Lau

Against Carbon Taxes

- In response to Revenue-neutral Carbon Pricing is the right policy - The Stern Review on the Economics of Climate Change, produced by a team led by former World Bank Chief Economist Nicholas Stern, was released in 2006. According to the authors of the report, “climate change is a serious global threat” and the “greatest market failure the world has ever seen” – but after a decade, we’ve still not seen it. The climate models have almost invariably over-predicted warming, which suggests that the modellers have overestimated the sensitivity of temperatures to emissions. There persists widespread disagreement in the scientific community and the general public as to how much of the warming in recent decades is man-made and whether or not it is a significant problem. In 2014, the American Meteorological Society surveyed its members and found that only 52 percent of the 1,821 respondents (they had invited 7,062 to participate in the survey) believed that global warming had occurred over the past 150 years and that humans were mostly to blame. Hardly the scientific consensus that many believe to exist. Whether scientists exaggerate warming is yet another question. The late climate researcher Dr. Stephen Schneider infamously said in 1989 that in order to “reduce the risk of potentially disastrous climate change” and get “loads of media coverage” scientists have to “offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have.” A recent survey of 123 German climate scientists by Senja Post of the University of Zurich found that “climate scientists object to publishing a result in the media significantly more when it indicates that climate change proceeds more slowly rather than faster than expected.” The study also found that “the more climate scientists are engaged with the media the less they intend… Read More

Bad policy to blame for Ontario’s economic decline

  The Albertans who put the New Democrats in charge of their province last May will be disappointed to hear that being ruled by Big Government (and its equally ugly twin, Big Unions) is no fun. Just ask Ontarians, who live in a once-prosperous province that has been in steady decline in recent years.

   From 1992 to 2002, Ontario's economy grew by 47.9 percent, compared to 36.9 percent in the rest of the country, according to the newly published Fraser Institute study Ontario – No Longer a Place to Prosper. But from 2002 to 2013, economic growth was only 15.8 percent in Ontario, compared to 26.8 percent in the rest of Canada.   Philip Cross, the author of the study and former Chief Economic Analyst at Statistics Canada, places the blame for Ontario's decline on poor government policy.   Not coincidentally, the decline of Ontario began at the same time as a change in government. 2002 was Mike Harris's last year in office as Ontario Premier, and 2003 was Dalton McGuinty's first.   A report published by the new Vancouver-based think tank Aha!, only two days before the recent Fraser study, found that based on fiscal and economic outcomes, Mike Harris was Canada's best premier since 1981. Of the 59 premiers ranked in the Aha! report, Dalton McGuinty placed 53rd, and his successor Kathleen Wynne was ranked the worst current premier in Canada among those who have been in office for at least one year.   As shown by Philip Cross's Fraser study, Ontario's unemployment rate was below the national average every year from 1976 (the earliest year with the available data) to 2005, but has been higher than the national average since 2006.   In particular, youth unemployment has remained stubbornly high – and would be much higher had youth labour participation rates… Read More

Extra costs of government employees – $20 Billion in 2010

If government employees in Canada received the same wages and benefits as private sector workers, Canadian taxpayers would have saved $20 billion in 2010, according to a new report from the Canadian Federation for Independent Business (CFIB). In fact, Ted Mallett, the CFIB’s chief economist and the author of the report, says that $20 billion is likely to be an underestimate. According to the CFIB, employees of the federal government receive a salary premium of 13.0% above what private sector workers make, even after controlling for differences in occupation, age, and education. Provincial government employees enjoy a 5.5% salary premium, and municipal government employees enjoy a salary premium of 8.9%. However, when other benefits – such as working hours and pensions – are taken into account, the premiums jump to 33.2% for federal government workers, 21.2% for provincial government workers, and 22.3% for municipal government workers. The CFIB’s numbers are disputed by the very left-wing Canadian Centre for Policy Alternatives, which published a paper last year claiming that “when you compare occupations that exist in both the public and private sector, full-time wages in the public sector are 2.3% higher than in the private sector.” It must be noted this figure takes into account only full-time wages, and not the benefits that the CFIB says accounts for most of the premiums that government employees enjoy. Still, the 2.3% figure is much lower than the salary premiums that the CFIB claims government employees receive. In addition, the Canadian Union of Public Employees (CUPE), whose reason for existence is to increase the wages and benefits of government employees, claims that the wage premium is only 0.5%. The CCPA used data from 2011, while CUPE used data from 2006. The CFIB’s study is for the year 2010. While left-wing think tanks and public… Read More

Unions make the rich poorer – but do they make the poor richer?

PressProgress, a website run by the very left-wing Broadbent Institute, recently published a post about how unions are wonderful institutions because they result in less income inequality, and by extension, less poverty. To make its point, PressProgress reproduced graphs showing that income inequality is on the rise in Canada and that union density is correlated with less income inequality. Two of the graphs are from a newly published International Monetary Fund article, which is based on a forthcoming IMF paper. The first shows that over the past few decades, high-income earners in advanced economies have increased their share of total income. The second shows that lower union density is correlated with an increase in the top 10 percent income share. I won’t argue with the claims and data showing that high levels of unionization reduce income inequality. It must be noted, however, that income inequality is not itself a bad thing. Making poorer those who are doing well (as unionization seems to do) does indeed reduce inequality but may not make anyone better-off. Therefore, the question should not be whether unionization reduces income inequality, but rather, whether unionization helps the poor. According to PressProgress, it does. PressProgress reproduces a graph from Unifor, which is the largest private-sector union in Canada. The graph regresses the poverty rate against collective bargaining coverage in OECD countries and finds that countries with a higher level of collective bargaining coverage tend to have lower poverty rates.     However, the poverty rate statistic that Unifor used is the relative poverty rate in each country, which is defined as the percentage of the population that receives an income of less than 50% of the median. Needless to say, it is not the best measure to use when determining whether unions reduce poverty. Consider, for example, that… Read More

CUPE lies to dodge Fraser report

In what will surprise no one, the Canadian Union of Public Employees has resorted to making things up after a newly published report by the Fraser Institute found that government workers in British Columbia make 6.7% more than private sector workers. The same report also found that compared to private sector workers, government workers retired earlier, had better pensions, were absent from work more often, and had much better job security. In response to this study, CUPE BC Secretary-Treasurer Paul Faoro said, “The Fraser Institute’s own research shows that the so-called ‘premium’ for public sector workers is nowhere near the magnitude they’ve been claiming for the past two years. In 2013, they claimed there was a 37.5 per cent premium, and today they’ve admitted that number is actually 90 per cent lower—though you won’t find that in their news release. But facts have never stood in the Fraser Institute’s way. Not only do they not acknowledge how shoddy and flawed their previous study was, they still use their findings to bash wages and benefits for working people, and to advocate for even less retirement security for all workers. No serious economist would give this ‘study’ any credence at all.” Unfortunately for CUPE, this entire statement made by its BC Secretary-Treasurer is a lie. The Fraser Institute’s 2013 study found that government workers in BC made a 37.5% premium before controlling for differences in education, job type, experience of workers, and other factors. After controlling for these factors, the difference dropped to 13.6%. Meanwhile, the 2015 study found that government workers made a 34.2% premium before controlling for the same factors, and 6.7% after. It is clear that the differences between these two studies are moderate, and reflect that the wage gap between government workers and private sector workers has changed somewhat in… Read More
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